Nokia suffers £1 billion Q1 loss -- Lumia phones haven’t yet paid off

Nokia published its Q1 2012 financial report 19 April, revealing a 1.34
billion euro loss (about £1 billion) and a 52 percent decline in
smartphone sales compared to last year. Consider this confirmation
that Nokia's investment in its Lumia line and the Windows Phone
platform hasn't paid off quite yet.

"We have launched four Lumia devices ahead of schedule to
encourage awards and popular acclaim," Stephen Elop, Nokia CEO,
states in the report. "The actual sales results have been mixed. We
exceeded expectations in markets including the United States, but
establishing momentum in certain markets including the UK has been
more challenging."

While the latest Nokia Lumia 900 was not included in the Q1 financials,
Nokia announced last week that the Lumia line is growing. The company
sold 2 million Lumia phones in the first quarter. Still, don't
expect much improvement in the Q2 financials -- the report states
that Q2 devices and services results will remain similar or even
dip below Q1 numbers.

Elop attributes the loss to the shift in consumer demand from
feature phones to smartphones and to greater-than-expected market
competition -- in other words, competition from the iPhone and popular Android devices.

"We're navigating through a significant company transition in an
industry environment that continues to evolve and shift quickly.
Over the last year we have made progress on our new strategy, but
we have faced greater-than-expected competitive challenges," Elop
states. "We are confident in our strategy and focused on responding
urgently in the short term and creating value for our shareholders
in the long term," he concludes.

Nokia's financials show net sales of 7.35 billion euros, around
£6 billion, down from last year's 10.4 billion euros, or £8.5
billion. The company sold 12 million smartphones, accounting for
1.7 billion euros (£1.4 bn) in sales. Still, these numbers are
significantly lower than Q1 2011′s results when Nokia sold 24.2
million smartphones at 3.5 billion euros (£2.8 bn).

In North America, the company sold only 600,000 phones -- both
feature and smart devices -- in North America. That's half the
number of phones Nokia sold in Q1 2011.

According to the report, the decline in phone sales is largely
due to the company's move away from Symbian phones toward Windows
Phone-based Lumia devices. Even though Lumia sales are increasing,
it hasn't been enough to offset the drop in the company's Symbian
line.

"The decline in our Smart Devices volumes in the first quarter
2012 was primarily driven by lower Symbian volumes in all regions,
as well as lower seasonal demand for our products, which more than
offset the sequential increase in Nokia Lumia device volumes," the
report states.

According to the report, the company is "taking action to drive
improvements in the trajectory of Lumia sales." It will be
interesting to see whether the company's commitment to its Lumia
phones and the Windows Phone platform will eventually return a
profit for Nokia.